WASHINGTON – More than $519 billion in wages that has been reported to the Social Security Administration can't be matched with workers,the agency says.
The total is presumed to reflect the large number of illegal immigrants working in the country using fake Social Security cards,Congress' chief budget adviser said last month.
“We know that immigrants work,we know that includes those who are here illegally,and the taxes are held by their employer regardless,” said Congressional Budget Office Director Douglas Holtz-Eakin in an interview last week. “It's logical that illegal immigrants would be in there.”
Holtz-Eakin first mentioned the issue at a House committee hearing on education and the workforce examining the overall influence of immigrants on the U.S. economy.
The $519 billion is a cumulative total dubbed the Earnings Suspense File that remains unmatched since the retirement savings program started in 1937. It represents gross wages – not withholdings deposited into the Social Security Trust Fund.
Although the exact amount due to the trust fund is hard to calculate because of fluctuating tax rates,tens of billions of dollars have been pooled there by people who are not getting credit for their contributions.
“I'd characterize it as far from a majority but it's perhaps more significant in recent years,” Holtz-Eakin said about how much of the suspense file is due to illegal immigrants.
Payments from unknown workers to the trust fund equal approximately 1 percent of contributions in recent years,but any positive effect on the trust fund is “negligible,” said Mark Hinkle,a spokesman for the Social Security Administration.
The suspense file increased steadily for the last five years,Hinkle said. In 1999 there was $38 million reported that had no identity match to the Social Security number,Hinkle said. By 2003,that number climbed to $57.8 million,with 2.1 million different invalid Social Security numbers used.
Part of the problem of trying to interpret immigrants' effects on the suspense file is the complete absence of any details about who the person was behind the unmatched Social Security number,Hinkle said.
“We don't have any breakdown simply because in a lot of cases we can't tell,” Hinkle said. “All we know at our end is it doesn't match. Until somebody comes forward,we simply don't know.”
All the agency can do when it receives withheld taxes that don't match a name or valid number is to send a letter to the employer. In some cases,it could take decades for legal workers to get credit for their payments to the trust fund,but once the mistake is caught they get full credit,Hinkle said.
Jeffrey Passell,a Pew Hispanic Center demographer,recently wrote a report on illegal immigrant workers. Using March 2005 U.S. Census data,he estimated that 6.9 million illegal immigrants currently work in the United States.
“My guess is most of the money going in there recently from undocumented immigrants is probably between 85 percent to 90 percent,” Passell said.
Regardless of their origin,the unmatchable contributions are having a small effect on the long-term health of the trust fund,said Jagadeesh Gokhale,a senior fellow at the Cato Institute,a libertarian think tank,in an e-mail message.
“Unmatchable contributions are helping us overcome only 6 percent of the 75-year shortfall for the fund,” Gokhale said. “It helps a little,but it’s small potatoes.”
Illegal immigrants,who oftentimes make up Social Security numbers or buy fake cards,don't have the same safety net,even if they later became legal residents and could prove they paid into the system.
“It's their money,and their claiming it shouldn't be used against them,” said Sarah Paoletti,a professor at American University's Washington College of Law who teaches a seminar on employment law relating to immigrants. “They see it as the cost of doing business in the United States – they accept it as a given.”
Paoletti also said illegal immigrants' contributions to the suspense file is likely considerable.
“More people are being paid with paychecks and paying taxes,” said Paoletti,who has given legal assistance to undocumented workers in Pennsylvania. “I think undocumented workers give a significant portion to the trust fund,and they'll never reclaim it.”
Misusing a Social Security number or card is a felony,but prosecution is rare,said Jonathan Lasher,a lawyer in Social Security's inspector general's office. The penalty,which includes up to five years imprisonment and fines,is for misuse and not other crimes such as identity theft that carry stiffer penalties.